A negotiated outcome
The DOCA terms are negotiated between the administrator and the company's controllers — creditors vote to accept or reject.
Explainer
Deed of company arrangement (DOCA): what creditors need to know
When a company enters voluntary administration, creditors vote on whether to accept a Deed of Company Arrangement — or push for liquidation. Understanding what a DOCA means for your debt is critical to getting the best available outcome.
A Deed of Company Arrangement (DOCA) is a binding agreement between a company in voluntary administration and its creditors that governs how the company's affairs will be dealt with and what creditors will receive. It is the key document that determines whether a distressed company survives in some form, or proceeds to liquidation.
Creditors vote on a proposed DOCA at the second creditors' meeting, typically within 25 business days of the appointment of a voluntary administrator. The decision to accept or reject it — and the amount creditors ultimately receive — depends heavily on what the DOCA proposes and how it compares to the likely return in liquidation.
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Compare to liquidation
The central question is whether the DOCA offers creditors more than they would receive if the company were liquidated.
Proof of debt matters
Lodging your proof of debt correctly and on time is essential to participating in any distribution.
Your vote matters at the second meeting
Understanding the DOCA before you vote can be the difference between a partial recovery and nothing.
Common questions
Frequently asked questions
If I vote yes to a DOCA, does it mean I accept less than I'm owed?
Usually — a DOCA typically offers cents in the dollar compared to the full debt. The question is whether that amount is better than the estimated liquidation return, which may be lower still.
What if I miss the creditors' meeting?
You can appoint a proxy to vote on your behalf, or in some circumstances vote in writing before the meeting. Missing the meeting without a proxy means you forgo your vote.
Can I still sue the company after a DOCA is executed?
Generally no. A DOCA binds all creditors whose claims arose before the administration, and typically prevents individual legal action while the DOCA is in effect.
What happens if the DOCA is not completed successfully?
If the company fails to meet its DOCA obligations, the administrator or a creditor may apply to terminate the DOCA, which typically leads to liquidation.
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Creditor in a voluntary administration?
Talk to Merion about what you can do to protect your position.